ES Risks and Shareholder Voice

72 Pages Posted: 26 Nov 2018 Last revised: 28 Jan 2022

See all articles by Yazhou He

Yazhou He

University of Manchester

Bige Kahraman

University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR)

Michelle Lowry

Drexel University; European Corporate Governance Institute (ECGI)

Date Written: January 19, 2022

Abstract

We examine whether shareholder votes in environmental and social (ES) proposals are informative about firms’ ES risks. ES proposals are unique in that they nearly always fail. We examine whether mutual funds’ support for these failed proposals contains information regarding the ES risks that firms face. Higher support in failed ES proposals predicts subsequent ES incidents, the effects of
these incidents on shareholder value, and firms’ overall stock returns. Examining the detailed records of fund votes, we find that agency frictions amongst a group of shareholders contribute to proposal failure.

Keywords: shareholder proposals, voting, mutual funds, environmental, social

Suggested Citation

He, Yazhou and Kahraman, Bige and Lowry, Michelle B., ES Risks and Shareholder Voice (January 19, 2022). European Corporate Governance Institute – Finance Working Paper No. 786/2021, Available at SSRN: https://ssrn.com/abstract=3284683 or http://dx.doi.org/10.2139/ssrn.3284683

Yazhou He

University of Manchester ( email )

Oxford Road
Manchester, N/A M13 9PL
United Kingdom

Bige Kahraman

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Michelle B. Lowry (Contact Author)

Drexel University ( email )

Philadelphia, PA 19104
United States
215-895-6070 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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